Keeler v. Standard Folding Bed Co. ( 1895 )

Mr. Justice Brown,

with whom concurred

The Chief Justice and Mr. Justice Field, dissenting.

The exact question presented by the record in this case is, whether a dealer in patented articles, doing business in -Massachusetts, and knowing that the right to manufacture, use, and sell such articles within that State belongs to another, may purchase such articles of the patentee in Michigan, in the ordinary course of trade, for the purpose of resale in Massachusetts, and may sell them there in defiance of the rights of the licensee.

The right to do this is supposed to arise from the fact that the defendants, having once paid tribute to the patentee by purchasing the patented articles of him, thereby acquired the right to deal with such articles as they please, notwithstanding that another has bought and paid for the exclusive right to manufacture and sell them within their territory. The cases in this court which are supposed to justify, or at least to lead up to this conclusion, seem to me to fall far short of this somewhat startling result.

In Wilson v. Rousseau, 4 How. 646, it was decided, (1) that the patent act of 1836 authorized an extension of a patent to be granted- to the administrator of the patentee, and that such extension inured to the benefit of such administrator, and not to an assignee under the original patent; (2) that the plaintiff, claiming title under the extension to the administrator, could maintain an action for infringement of the patent within the territory specified in the assignment, against any person not claiming under such assignment; and (3) that an assignee who had purchased the right and was in use of the patented machine at the time of the renewal had the right to continue such use during the extension. Although cited in the opinion of the court, I am unable to see that it has any bearing upon the case under consideration.

The case of Bloomer v. McQuewan, 14 How. 539, 549, did not differ materially .from the prior one, although the Chief Justice draws a distinction between the grant of a right to make and sell the machine, and the grant of a right to use it; and in this connection makes use of an expression which has been freely quoted in subsequent cases, and is now employed in a way which, seems to me destructive of the rights of the licensee: “ But the purchaser of the implement or machine for the purpose of using it in the ordinary pursuits of life stands on different ground. In using it he exercises no rights created by the act of Congress, nor does he derive title to it by virtue of the franchise or exclusive privilege granted to the patentee. . . . And when the machine passes to the hands of the purchaser ” (for such use) “ it is no longer within the limit of the monopoly. It passes outside of it, and is no longer under the protection of the act of Congress.” The question in that case, however, concerned only the rights of an assignee of a patent which had been extended, and the point decided was that the assignee was entitled to continue to. use the patent during the extended period. In this connection there can be no question of the propriety of the language quoted. It would indeed be a strange principle to hold, that a party who had bought a patented article during the original term of the patent, should be obliged to pay an additional royalty for its use, if that term were extended.

In Mitchell v. Hawley, 16 Wall. 544, the patentee assigned to another the right to make and use, and to license others to make and use, four of his machines during the original term of the patent, with the express provision that the grantee should not dispose of, sell, or license any one to use such machine beyond the said term. The patent was extended for seven years, and a grant to use the machines for the two States in question during the extended term was made to another. In delivering the opinion1 of the court, Mr. Justice Clifford quoted liberally the general language of the prior cases, but held that the grantor, under whom the defendants claimed, never acquired the right to sell the machines, and give their purchasers the right to use them, beyond the term of the original patent; and that notice to the defendants, who had purchased their rights from the grantee of the original term, was not required, as the law imposed the risk upon the purchaser, as against the real owner, of ascertaining whether the title of the seller was such that he could make a valid conveyance. In this case, the purchaser from the original grantee of the term was held affected with knowledge of the terms of the grant from the patentee, which expressly took from the assignee the right to sell or grant any license to use the machines beyond the expiration of the original term. This case seems to be a limitation upon the general doctrine of the prior cases, that, by a purchase of the patentee, the patented article is thereby taken out of the monopoly. So far as the case is pertinent at all to the instant case, it favors the position taken by the court below.

There are but three cases that have any direct bearing upon the one under consideration, namely, Adams v. Burke, 17 Wall. 453; Boesch v. Graff, 133 U. S. 697; and Hobbie v. Jennison, 149 U. S. 355. In Adams v. Burke the original patentees assigned to a firm in Cambridge, Massachusetts, all their right in the invention to a circular territory extending ten miles from the city of Boston. Defendant, an undertaker doing business at Natick, outside of this territory, bought certain coffins of the Cambridge firm, and used them in burying the dead, but sold none, except so far as the use of the coffins in his business could be considered as a sale. It was held that the defendant, having purchased the coffins of one who had a lawful right to sell them, had a right to use them anywhere ; that the patentee, having received his consideration, the patented articles were no longer within the monopoly of the patent. The case was treated both in the opinion of the court and in the dissent, in which three Justices concurred, as a case of use and not of sale, and Mr. Justice Miller in delivering the opinion observed : “ Whatever, therefore, may be the rule when patentees subdivide territorially their patents, as to the exclusive right to make or to sell within a limited territory, we hold that in the class of machines or implements we have described, when they are once lawfully made and sold, there is no restriction on their use to be implied for the benefit of the patentee or his assignees or licensees.” The dissenting Justices were of opinion that the assignment did not confer upon the assignee the right to sell the patented article to be used outside of his territory. There was no suggestion in either opinion that a purchaser from the assignee had or could have the right to deal in the patented article outside of the territory in which the purchase was made.

In Hobbie v. Jennison an assignee for the State of Michigan sold and delivered in that State certain patented gas and water pipes, knowing that they were to be laid in the streets of Hartford, Connecticut, a territory, the right for which the seller did not own under the patent. The pipes were laid in that city. It was held, following Adams v. Burke, that the seller was not liable, in an action for infringement, to the owner of the patent for Connecticut. The action in this case was brought not against the user, but against the manufacturer and vendor of the patented article, and it was held that, as the sale was completed in Michigan, neither the actual use of the pipes in Connecticut, nor the knowledge on the part of the defendants that they were intended to be used there, could make them liable. This case also involved the right to .use and not to sell, and was held to be indistinguishable from Adams v. Burke. It differed from that only in the fact that the action was brought against the vendor.

The machines or implements thus referred to in these cases are such articles as are exhausted or consumed in their use; that is, where articles are of no value after a single use, there is no restriction on their further use in favor of the patentee or assignee. "When a patented article of that kind, the whole value of which consists in its use for a particular purpose, and which value ceases when its capability of use for that purpose is gone, the monopoly of the patentee or his assignee over it must necessarily cease upon its sale to the purchaser.

Upon the other hand, in Boesch v. Graff, 133 U. S. 697, it was held that one who purchased articles covered by a patent in a foreign country, and • imported them into the United States, could not sell them here without the license or consent of the owner of the American patent, although they were purchased in a foreign country from a person authorized to sell them. This is the only case decided by this court in which the right of a purchaser, to sell patented articles outside of the territory of his vendor has been drawn in question, and I see no reason why the arguments, which moved the court in that case to hold that this could not be done, do not apply with equal cogency to a case where the patented articles are bought within the United States. In both cases a tribute has once been paid to the patentee, and the fact that that-tribute was paid, in a foreign country works no apparent difference in the principle.

In this connection the following decisions of the Circuit Courts, though not binding upon us as authority, are at' least entitled to respectful consideration: In Hatch v. Adams, 22 Fed. Rep. 434, it was held by Judge McKennan that a purchaser of patented articles from a territorial assignee of the patent does not acquire the right to sell the articles, in the course of trade, outside of the territory granted to his vendor. A like ruling was' made in the Southern District of New York by Judge Wheeler, in Hatch v. Hall, 22 Fed. Rep. 438, and 30 Fed. Rep. 613, and in the Circuit Court for the Northern District of California in the California Electrical Works v. Finck, Judge Hawley, 47 Fed. Rep. 583.

In'view of the cases of Adams v. Burke and Hobbie v. Jennison, this court must be considered as committed to the doctrine that a vendee, purchasing a patented article of the patentee or his licensee, has a right to make use of the same wherever he may take it, notwithstanding the fact that the purchase be made with the knowledge of the vendor that the article is to be used in the territory of another, and with the knowledge of the vendee that the territory in which he proposes to use it is owned by another. We are now asked to take another step in advance, and hold that a rival dealer, with notice of the territorial rights of a licensee or assignee, may purchase any quantity of patented articles of the pat: entee, and sell them in his own territory in defiance of the right of the assignee in such territory. To this proposition I am unable to give my assent.

By Rev. Stat. sec. 4898, “ Every patent, or any interest .therein, shall be assignable in law by an instrument in writing, and the patentee or his assigns or legal representatives may, in like manner, grant and convey an exclusive right under his patent to the whole or any specified part of the United States.” The object of this statute is to vest in the licensee the exclusive right of the original patentee to make, use., and sell the invention or discovery within the territory assigned, and to take to himself the profit upon every article sold in such territory. This right is presumed to be a valuable one, and is entitled to the protection of the courts and to a reasonable construction, in so far as it does not infringe upon the rights of others, who may have purchased the patented articles of one who had a lawful right to sell them. That one who makes use of or sells a patented article in ignorance of the fact that it is patented, is liable as an infringer, is entirely well settled. (Walker on Patents, secs. 377, 569; 3 Robinson oh Patents, sec. 901.) Tet we are asked to hold in this case that one, who is fully informed of the rights of a territorial assignee, may deal in the patented articles in defiance of such assignee, upon the ground that he has once submitted to the exactions of the patentee by purchasing the article of one who had a right to sell it. There is reason for saying that a person who has once paid tribute to the patentee shall not be called upon to pay tribute a second time, by reason of using the article elsewhere, but to say that he may purchase such articles for the deliberate purpose of entering into competition with a local licensee, is utterly destructive of the right of the latter to deal' in the patented article. Under this rule a patentee may assign his right to make and sell the patented article in every State in the Union except his own ;. may there establish a manufactory, and may, by his superior facilities, greater capital, more thorough knowledge of the business, or more extensive acquaintance, undersell his own licensees, drive them out of business, and utterly destroy the value of their licenses. In my view this cannot be done, and I am, therefore, compelled to dissent from the opinion of the court.

I am authorized to state that The Chief Justice and Mr.. Justice Field concur in this dissent.